MNI BRIEF: New GDP Index Equal To SNB, KOF Measures - Study

Forward-looking measures of unemployment (FLUR) are as effective at predicting year-to-year Swiss GDP growth as the two leading monthly indicators, a paper published in the Swiss Journal of Economics and Statistics concludes.

While the Swiss National Bank’s quarterly Business Cycle Index (BCI) and the KOF Barometer are timely and draw from a broad set of indicators, the complexity of their underlying models and reliance on noisy data create uncertainties, Peter Kugler and George Sheldon argue, adding that they had a more straightforward approach which could be incorporated into existing measures.

“Our findings suggest that our approach offers a reliable and useful indicator to policymakers seeking easily compiled information on the current and future course of the Swiss economy at monthly time intervals.”

The KOF Economic Barometer rose from 90.7 points in June 92.2 points in July, implying below-average development for all indicators bar consumption. The SNB's March BCI showed increasing business optimism overall despite some differences in the outlook for services and manufacturing over Q1 2023. (See MNI WATCH: SNB Hikes 25bps, More Likely Coming)